After Volkswagen, Samsung is the latest company to challenge the Indian tribunal's tax demand worth $520 million for alleged misclassification of networking equipment imports.
Earlier this year, Indian tax officials ordered the South Korean tech company to pay $520 million, accusing it of avoiding 10–20% in duties by misclassifying imports of mobile tower equipment. Samsung reportedly sold this equipment to Mukesh Ambani’s Reliance Jio between 2018 and 2021.
However, Samsung argued that Indian authorities were fully aware of the import practices, as per a report by Reuters. The tech giant even pointed out that Reliance, India’s largest conglomerate, had followed a similar approach for years.
In its 281-page appeal filed with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Samsung claimed that the authorities were "fully aware" of the business model, as Reliance had been importing the same equipment without paying tariffs for three years, up until 2017. "The classification adopted by the appellant (Samsung) was known to the authorities, however the same was never questioned ... Department was fully aware," Samsung said in its filing, as reviewed by Reuters.
"Reliance Jio officials did not inform" Samsung about the tax warning of 2017, the filing further added. Besides the $520 million tax demand, a fine of $81 million has also been imposed on seven of the company's employees. This apparently takes the entire figure to $601 million.
Samsung not the only one
Earlier this year, the Indian government declined to withdraw a $1.4 billion tax demand issued to Volkswagen. This was perhaps one of the largest import duty claims in the country’s history. The automaker even called the case a “matter of life and death” for its operations in India.
However, Indian officials argued that quashing the demand would have "catastrophic consequences" and other companies might start taking a similar path.
According to the court filing, the tax authority claimed that Volkswagen was submitting "information and documents critically required for" finishing shipment reviews "only in bits and pieces."
